Alternative Commercial Real Estate Financing Sources
If you’re having trouble obtaining traditional capital for your real estate project, you may think you’re out of luck. However, there are many untraditional avenues available today that can lead to funding. You may not be sure where to start, so take a look at this list of alternative commercial real estate financing sources to get ideas for your next project.
Did you know that there are now crowdfunding sites dedicated solely to real estate? They put your plan up where investors can see and bid on it. The transaction is completed exclusively online and you have a wider pool of investors looking at your proposal than you could find in the real world. This means your goals are realized much more quickly.
Try Venture Investors or Syndications
If you like the idea of investors, but don’t feel safe doing business online, you can try hooking up with venture partners. They are wealthy individuals who offer you money in exchange for part of your profits. You can work with one investor or several for commercial real estate financing, such as a real estate syndication. Syndications often want a certain amount back based on their original loan, but some may ask for a percentage of your sale.
Try Alternative Loans
If you’ve been turned down for a bank loan, there are other types of money available. A hard money loan through a broker will give you short-term funds based on the value of a piece of property you put up as collateral. You can choose to use the plot you’re buying or one that you already own. You can also try a personal loan from someone you know. Borrowing from someone you have a relationship with may be a more economical choice because they might offer time to build your business before paying them back.
Try Seller Financing
Fix and flip projects might entice a seller to offer you financing in order to delay taxes on the sale, or even lower them. This option often costs less to pay back.
Try an Equity Trade
Something else you can try is trading the equity in a piece of property you own into a new sale or project. Then, you simply pay it back when you sell the new property sells. In this way, you can make a down payment on the project’s interest with a minimum of trouble.
Just because you’ve been turned down by a bank for commercial real estate financing doesn’t mean that you’re out of options. Try any of these sources to get started.